Abstract
The case describes the uncertain and unavoidable events that delayed the commissioning of a transformer at Central India Oil Refineries Ltd. The project was not being executed as planned, resulting in the delay of almost all the activities. The commissioning of the transformer had become the bottleneck of the refinery because all the pre-commissioning and commissioning activities of the refinery required steam and power, which were in turn dependent on the transformer. Project management tools such as the critical path method and programme evaluation and review technique were used to analyze the time required for the completion of the commissioning of the transformer and resource reallocation for speeding up the project. A cost versus time trade-off analysis was applied to determine the activities to be crashed in order to produce the maximum overall job profit.
(Date: 16, May 2011, CIORL Head Office, Central India)
A. K. Singh, Vice President of CIORL asked Manger Electrical, S. N. Sinha:
Why can’t the transformer be charged on time? It is expected that the transformer should be charged before monsoon and you are saying that you want two more weeks. Don’t you know that the pre-commissioning activities of the refinery are dependent on this transformer? What is wrong with your planning? Why is this project getting delayed again and again? I want to know where we have gone wrong in the planning and monitoring and I want a complete analysis of what you do and just make sure that the transformer is charged before June 30, 2011.
Vice president of Central India Oil Refineries Ltd (CIORL), A.K. Singh, in-charge of commissioning 30 MVA/33/6.6 kV transformer (power rating 30 MVA; input voltage 33 kV; output voltage 6.6 kV, i.e., step-down transformer), was wondering whether the commissioning work will be completed at all. He was beginning to realize that as a result of the inordinate delays faced at various stages of the project, it would be impossible to meet the 40-day deadline. Since the monsoon season was around the corner, the threat of rainfall loomed large. Rainfall would result in many undesirable outcomes as follows.
Crane march would be impossible because in a crane march, the transformer is erected by placing it on a concrete foundation.
Hydra march would be difficult because in a hydra march, various parts/components of the transformer are assembled on an erected transformer.
Since it would be an open-air transformer, testing would be blocked.
Trench cleaning work would not take place and, hence, cabling would not begin.
There were also many activities which would get delayed because of their strong interdependencies on the previous activities. For example, the fire-fighting system and soak pit (which was used for cleaning/emptying the oil from the transformer) may get delayed because of the delay in testing.
Singh was weighing various options. He was also getting worried about similar problems that he might face in commissioning the remaining seven transformers of similar ratings at captive power plant (CPP). He thought, ‘I am not going to repeat the same mistakes again!’ He called his sub-ordinate Mr S.N. Sinha (manager—electrical) to his office. Mr Sinha, a Graduate Engineer with specialization in electrical engineering from a reputed engineering college in central India has been working in CIORL for five years. He was recruited in the organization directly through campus recruitment from his engineering institute. He had been involved in the project from day 1.
Sinha, we are getting late on all fronts in this transformer commissioning work. I don’t think we can afford to repeat the same mistakes again for the remaining transformers. Kindly come up with a detailed analysis on whatever has happened by now and any suggestions for improvement.
Company Background (CIORL)
CIORL was setting up a 9 MMTPA 1 grass-root refinery in central India. The crude oil was to be imported from crude terminal coast, located at Mumbai and through 1,000 km cross-country pipeline; the crude was to be pumped to CIORL, central India. It consisted of complex hydrocarbons of carbon and hydrogen along with impurities like sulphur, nitrogen, etc. The refining process of crude oil involved primary, secondary and tertiary processing units. Primary processing involved separation (distillation) of crude oil into various products at different temperatures. Secondary processing involved upgrading of products from primary processing units into valuable products such as diesel, petrol, aviation fuel, liquefied petroleum gas (LPG), etc. The tertiary unit was basically a treatment unit, where impurities such as sulphur, nitrogen, etc. were removed from valuable products. A A co-generation based captive power plant (CPP) (CPP) was also planned for meeting the steam and power requirements of the refinery. An additional petroleum coke (petcoke) plant was installed to convert the residual of crude into petcoke, which would then be fed to the CPP.
CIORL Layout
CIORL employed around 160 executives which comprised five senior vice presidents, ten vice presidents, ten assistant vice presidents, ten managers, forty-five assistant managers and eighty assistant engineers for an on-site project department. The key activity of the CIORL refinery was refining crude oil into valuable products such as petrol, diesel, aviation fuel and LPG. 2 The project envisaged setting-up of the facilities as depicted in Figure 1.
Organizational Structure of CIORL
The organizational chart of CIORL is shown in Figure 2. The following eight departments are there in CIORL:
Process department Instrumentation department Mechanical department Electrical department Planning department Commercial department IT department Fire and safety department
Out of these, four departments, namely process, instrument, mechanical and electrical were involved in field activities.
The electrical department had a senior vice president (Sr. VP), a vice president (VP), an assistant vice president (AVP), five managers, fifteen assistant managers (AM) and twenty assistant engineers (AE). The electrical department had allocated one manager along with two assistant managers and two assistant engineers for the commissioning of the CPP. The company had one general shift of 8 hours from 8:30 a.m. to 5:30 p.m. but it often got extended to 10:00 p.m.
Organization Structure of CIORL
The cross-country crude oil pipeline of CIORL was at the completion stage. The pumping of crude oil from Mumbai to central India was to commence once the pipeline had been completed. In order to commission the refinery, the Crude Distillation Unit plant needed to be commissioned first and in order to pre-commission activities, steam and power were required from the CPP. Further 6.6 kV voltage was required for starting the commissioning activities of the CPP. Subsequently, the charging of the transformer T-1 was required urgently.
Project Management
Projects with well-defined processes and control over development activities were expected to be completed on time. A refinery was a complex project involving various plants such as distillation units, catalyzers, sulphur recovery blocks, petrol and diesel manufacturing blocks, CPPs, etc. CIORL had categorized the grass-root refinery project into two phases: project phase and running phase. The project phase involved erection, testing and commissioning of the plant, whereas the running phase included operations and maintenance of the same. During the project phase, project management processes involved macro- and micro-activities for the project commencement, managing control over the on-going work effort and closure of the project. These activities needed to be performed daily, weekly or monthly depending on the project characteristics. CIORL chose to have a daily meeting for specific plant progress and a monthly meeting for the overall progress of the plant.
For a successful CIORL project, the project management team needed to foster effective communication and information flow among contractors, consultants and clients. The project management team had to provide enhanced focus on uncertain events that could occur and recommended actions, for proper planning, scheduling and utilization of project resources such as manpower, equipment, etc. Coordination among project managers of various plants and departmental managers within the same plant was essential for the smooth progress of the project. The project management team also needed to effectively share the knowledge between consulting and client project teams, and it needed to provide a basis for contractors and subcontractors along with ensuring the quality of project and client satisfaction.
2*50 MW (2 units of 50 MW each) CPP was required to meet the steam and power requirement of the refinery. CIORL had also employed a project management consultancy (PMC) headed by Mr M.N. Sharma, for the project. CIORL had outsourced the CPP to ABC Ltd. 3 (chief manager— Mr S.K. Ghosh) as Lump Sum Turn Key Contract (LSTK). 4 ABC had employed many sub-contractors 5 for the erection and support activities for the commissioning of the CPP.
The sub-contractors believed that they had quoted a reduced amount for the project during the bidding process; hence, they employed limited manpower. Bidding for such contractual works was very competitive and there was high pressure to win such contracts on part of contractors. The price to be quoted for contracts was arrived at by taking care of the men, material and machine requirements as per the scope of the work in addition to the profit margin. Sometimes, the price quotes could not take care of the subsequent increase in the price of men, material and machines.
Sub-contractors could get confused as they had multiple bosses. Hierarchy and co-ordination among contractor (ABC), consultant (PMC) and client (CIORL) was a big problem. Each had different goals. Under pressure, ABC stressed more on completing the project in minimum possible time and was pushing the sub-contractor to do the same. PMC, the consultant, was focused more on the specifications 6 to be followed and was less interested in pushing the project forward. CIORL was focused on the fast completion of the project taking care of all the required testing and safety norms. The challenge that CIORL faced was to manage the project with resource constraints such as manpower, funds, etc. and to ensure the quality of the project.
Project Plan
Consultants and contractors were employed to leverage the erection, testing and commissioning of transformer (Refer Table 1 for detailed role analysis). A phased approach was taken to ensure project completion by 8 July 2011. Mr Sinha made the planning schedule considering micro-activities for the charging of the transformer T-1. The original timeline of the project was as follows.
Project Character and Project Scope Statement
The original timeline of the project is shown in Table 2. Though the project started in accordance with the plan, due to various uncertainties, it was quite clear that the project was not going to be completed on time. Each and every activity was getting delayed and, hence, transformer charging became the bottleneck for the commissioning of the refinery.
Planning and Completion Dates of Various Activities
Project Organization
The project was allotted to the sub-contractor XYZ Ltd. 7 (chief manager—Mr S.K. Khurana) for carrying out the electrical related work of the project. In the initial phase, XYZ was effectively carrying out the various micro- and macro-level activities of the project. As the project progressed, XYZ started facing a lot of problems. According to them, manpower shortage was the biggest problem. There were only two testing engineers employed by the sub-contractor. As the electrical works required the testing of equipment, proper supervision was of utmost importance. While testing normally took less time, considerable time was being wasted in making arrangements such as shifting of testing equipment, power supply, discharge rod, etc. The testing needed to be monitored by both the consultant and the client. Most of the time improper coordination also delayed the testing works. All these factors were hampering the progress of the project.
Project Scope
Mr Singh re-classified the activities into eight major work packages as shown in Figure 3. They were as follows.
Erection: Placing the transformer on the concrete foundation.
Assembling of various parts of transformers such as conservator, HV box, etc.: Attaching various components of the transformer once the transformer is kept on foundation.
Oil filtration: Filtering and adding oil to the main tank and conservator of the transformer. Removal of moisture and dust from the transformer oil by using an oil filtration machine.
Testing: Performing various on-site tests of the transformer for checking the healthiness of the transformer.
Cabling: Connecting high-voltage and low-voltage cables to the transformer.
Fire-fighting system: Installing the fire-fighting system on the transformer.
Soak pit: Digging and covering of the soak pit; required for emptying oil of the transformer in the future.
Commissioning: Charging of transformer for the first time; electrical inspector approval was required for this step.
Activity and Work Packages Chart
For the first activity, that is, erection of transformer, statement of work was: 30 MVA transformer T-1 (50 Tons Weight) to be placed on concrete foundation. For this activity, 120 Tons Crane was required and manpower comprising two groups of five labourers each was required. If all the resources were available, then it would take only one day to place the transformer on its foundation. The cost of this activity would be ₹ 80,000. It normally took fifteen days to manage the payment of this amount which included approval from the top management. It also accounted for the payment to the contractor. Similar statements of work for all the activities are shown in Table 3.
Statement of Work for All the Micro-Activities
Action Plans and Critical Success Factors
Mr Sinha and his team (Mr Sharma, Mr Ghosh and Mr Khurana) for the transformer commissioning project came up with inter-relationships and time estimates for each of these activities. The estimates are shown in Table 4. While making an estimate for an activity, Mr Sharma considered the following points:
Adequate information was collected for the sequence of activities. Past experience regarding the time taken for each of the activities was incorporated. In case, past data were not available for an activity, guesstimate was made. Uncertain elements that delayed the activities were factored in by adding buffer time subjectively.
Interrelationship between Various Work Components and Time Analysis
An important requirement for the project was the availability of resources. In this project, a critical resource was the manpower required for all these activities. Mr Khurana and Mr Ghosh calculated manpower requirements which are provided in Table 5. Mr Sinha thought that they could now use this information to reallocate resources based on most critical activity to least critical activity.
Resource (Manpower) Analysis
The cost requirements for the work packages (Table 6) were also estimated so as to mobilize the funds as per the requirements. Mr Sinha was taking care of everything so that the project could be completed on time, but there were a lot of uncertainties that were troubling him such as:
Absenteeism of engineers and labourers Unavailability of temporary manpower No route for crane to march due to excavation (since other works such as drainage, underground piping for fire fighting, etc. were in progress resulting in the digging of roads) Strikes Possibility of rain Testing-related problems (for this, a vendor was required to resolve the problem).
Funds Flow Analysis
He realized that he was not going to meet the scheduled tasks as had been planned. He was wondering which activities were critical and should be paid more attention to. He was not able to identify the critical activities of the project. He also realized that there were many uncertainties involved in the project. He called Mr Sharma, Mr Khurana and Mr Ghosh for estimating the date for project completion. Mr Khurana gave optimistic estimates, whereas Mr Sharma gave pessimistic estimates for the project. Mr Sinha found Mr Ghosh’s estimates very realistic (most likely) for the completion of the project (Table 7).
Three Estimate Approach
The top management realized that this was the month of May and monsoon rain was expected by 30 June 2011. Mr Singh was asked to complete the project before the monsoon. He informed the management that it was difficult to charge the transformer on time. Since the project was getting delayed and there was an urgency to complete the project before deadline due to weather conditions, additional funds were required to speed up the project. Considering the situation, top management allotted ₹ 1 lakh (₹ 100,000) and gave full authority over resources and planning to Mr Singh for completing the project before the rainy season could begin.
Mr Singh called Mr Sinha to find out what could be done. First of all both realized that under these uncertainties it was difficult to charge the transformer on time. Next, speeding up the project would be extremely difficult. The extra amount allocated also seemed insufficient (Table 8) to expedite any activities.
Singh was wondering what he should do. He was also worried about facing similar problems in the future.
Time–Cost Trade-Offs
